Who bought & sold Brewin after £32m tech writedown

On 13 May Brewin Dolphin surprised the market by taking a £32 million hit on a technology U-turn.

The news shaved 2.2% off the wealth firm's share price on the day and the analyst community said the tough decision could be ‘negative to sentiment’.

The decision to ditch plans to implement the Figaro software was the latest development in a major strategic overhaul at Brewin, which has seen it consolidate its regional network as part of a restructure to cut costs.

With the firm also embroiled in a High Court poaching row with rival Charles Stanley, it has been an interesting few months for Brewin, which is led by chief executive David Nicol (pictured).

The stock continues to be a popular play among fund managers and a number of key trades took place in the aftermath of the tech write off.

Sellers

According to information seen by Wealth Manager concerning transactions which took place between in the four weeks up to 12 June one of Brewin's biggest investors, Kames Capital, sold around 875,000 shares, reducing its total stake to 8.43%.

Ryan saw the opportunity to buy into Brewin in 2013 following a placing by the firm. In March this year she told Wealth Manager: 'I think the market was a bit worried about the RDR changes and what that meant for many businesses in the financial space.

‘But in terms of what we have heard on pricing from them [Brewin], we believe it has a strong investment case and we are comfortable with that. The valuation is quite full but that has been the case for some time.’

Other big investors to trim stakes included Royal London and BlackRock, which sold around 280,000 and 1 million shares respectively, reducing their positions to 5.09% and 4.75%.

Citywire AA-rated Martin Cholwill was the biggest Royal London investor on 12 June with a 2.89% stake through his UK Equity Income fund. 'There has been a transitional management, so there is an orderly handover. I don’t think there is anything to worry about with the management change, he told Wealth Manager in April.

After March's Budget Wright was excited by the opportunity chancellor George Osborne’s shock overhaul to pensions presented to Brewin. ‘The Budget is [a] positive for wealth managers as it encourages saving and means pensioners will need more help managing their assets in retirement,' Wright said.

‘A key position is Brewin Dolphin which also benefits from internal change as a new management team focus on cutting costs and raising margins closer to those of peers.'

Unicorn Asset Management’s purchase of 500,000 shares through the Unicorn UK Income fund, which was managed by the late John McClure, was another notable trade. The moved lifted the fund’s stake to 2.81%.

The rest

Beyond the eye-catching trades, other top investors in Brewin kept their positions more or less steady.

These included Artemis Investment Management, which trimmed 100,000 shares off its holding to reduce it to 0.78%.

Performance

At 10.30am shares in Brewin were trading at 304.8p, around 15% below their 52-week high of 357.6p.

In a trading update at the end of May, Brewin firm profits had soared by more than 25% to £29.7 million in the six months to the end of March, although this figure does not include the £32 million tech writedown.

Earlier this week, broker Liberum left a meeting with Brewin in a positive mood, prompting it to repeat its buy rating on the stock.

'Driving operational efficiency has been the focus of management efforts...the group appears to be on track,' analyst Justin Bates said in a note on the stock.

Liberum also highlighted Brewin's target of 5% in discretionary net inflows does not look overly challenging given the 12% achieved in 2010 and 9% in 2011.

'Once the "organisational plumbing" is fixed and systems functioning as desired, the team can then confidently turn attention to asset gathering,' Bates said.

'Brewin [looks] an attractively priced and interesting play of the UK wealth management sector.'

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